The High Priests of Deception

The Church lost a lot of its power during the plague.

The clergy not only failed to stop the pandemic, but they tried to suppress its severity. In other words, many people saw that the clergy were both impotent and dishonest. So people lost faith in the medieval Church.

Bernanke, Geithner and Summers are the high priests of high-leverage speculative finance.

They pretend that they can stop the worldwide depression with their oracular powers, and that the financial plague is not that bad.

But the facts say otherwise:

• Paul Krugman notes that even during the Great Depression, there were occasional upturns, which people touted (incorrectly) as the beginning of a recovery

• Krugman also calls the bank stress tests a mere "self-esteem class" for banks that no bank will be allowed to actually fail

• Former labor secretary Robert Reich blasts the whole notion that the crisis is over:

  But we're not at the beginning of the end. I'm not even sure we're at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy...So much money is sloshing around the economy that [mortgage prices are] bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn't.
  
  Cheap money, you may remember, got us into this mess. Six years ago, the Fed (Alan Greenspan et al) lowered interest rates to 1 percent. Adjusted for inflation, this made money essentially free to large lenders. The large lenders did exactly what they could be expected to do with free money -- get as much of it as possible and then lent it out to anyone who could stand up straight (and many who couldn't). With no regulators looking over their shoulders, they got away with the financial equivalent of murder...
  
  Some of the big banks will claim to be profitable, but don't bank on it. Neither they nor anyone else knows what their assets are really worth. Besides, the big banks are sitting on over $500 billion over taxpayer equity and loans. Who knows how they're calculating profits? Most importantly, there's still a yawning gap between the economy's productive capacity and what it's now producing, and absolutely nothing will turn the economy around until that gap begins to close.

• Tyler Durden points out that Americans are rapidly being divided into 2 separate worldviews - investors versus taxpayers - in the same way that the plague divided the world into "true believers" and those who saw that things were getting worse and that the Church could not do anything to stop it:

  The taxpayers are becoming angrier and angrier at the net present value destruction of future opportunities of being a U.S. citizen, while investors cheer every piece of information (whether or not supported by facts) that provides a push to their current net worth, ignorant of what this may mean for the future. There will come a point where this schism reaches a boiling point, in the meantime, the paradox is that so many of the taxpayers are also investors, who are caught in a tug of war with themselves on what the proper response to the crisis should be: happy as a result of bear market rallies, or sad when they put the facts into perspective...
  
  The disinformation rift between the American taxpayers and investors will keep growing until inevitably, one day, it will escalate to the point where empty promises on prime time TV by the administration's photogenic representatives will not suffice, and real actions that benefit future American generations will be demanded...

Just as the clergy were able - during the initial stages of the plague - to reassure people that everything was normal, Bernanke, Geithner and Summers might be able - for a short while - to reassure gullible investors that the stock market and the economy as a whole is starting to bounce back. Indeed, the trillions of dollars they have thrown at the financial giants are partially intended to do just that - make things seem okay for a short while.

In reality, as leading trend forecaster Gerald Calente puts it, the main accomplishment of the government's response to the economic crisis has been to enable the wealthiest and most powerful to secure their own personal life rafts. But the government is doing nothing to plug the hole that is sinking the ship which the rest of us are on.

Note: I am not anti-faith or anti-spirituality (I am only talking about the medieval church). I am simply anti-lies and anti-ignorance.